Tax planning

This query is : Resolved

CA Sanjay Baheti (Querist)
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03 September 2012 one of my client being an Individual has 3 family Members as i)Him self ii)His Wife iii)His Major unmarried Son. so the are 4 Income Tax Files with me detailed as

i) Individual Himself having sources of Income as Salary Income from Proprietorship Manufacturing Firm in which his wife is proprietor & FDR Interest Income.He is Professionally qualified Engineer.

ii) His wife having sources of Income as Business Income from her proprietorship Firm and FDR Interest Income.

iii) His HUF family having sources of Income as Commission Income and FDR Interest Income.

iv) His son who also recently completed his Engineering education and having sources of Income as Salary Income and FDR Interest Income but below the taxable Income.

The first three as above mentioned are income tax payer and coming under 20-30% I..T.Slabs.

Now with a view to cover his son also under I.T Slab from 10%-20% as Tax Payer,I am planning to do the followings from tax point of view as

i) Gift of amount from Father's saving account to his Major Son's saving account due to love and affection by way of Gift Deed on Rs.100/- non-judicial stamp paper.

ii) Gift of amount from Mother's saving account to his Major Son's saving account due to love and affection by way of Gift Deed on Rs.100/- non-judicial stamp paper.

iii) Gift of amount from HUF's saving account to his Major Son's saving account due to love and affection by way of Gift Deed on Rs.100/- non-judicial stamp paper.

the amount so gifted to son from above is to going to be invested in FDR with Bank so that his income becomes taxable.

Now query is whether such tax Planning is proper as per Law or not.Please give reply point wise.

Praveen Kumar Rathi

Praveen Kumar Rathi (Expert)
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04 September 2012 Your tax plannng is right.

But i want to suggest u that you should earn commssion income in the file of HUF. because commssion income is earned by the ability of the person and HUF is not a person which have ability to earn income.